Krafton CEO used ChatGPT to dodge $250M bonus—Delaware court forces complete reversal
6 Sources
[1]
South Korean company following ChatGPT management advice forced to backtrack by court -- Krafton improperly ousted Subnautica developer bosses to dodge $250m bonus payout
South Korean game company disagrees with the ruling about its management of the US-based Subnautica developer. South Korea's Krafton Inc has been ordered to reinstate the leadership of a U.S. game studio that it acquired in 2021. The ruling, by a Delaware judge, says the Unknown Worlds
[2]
US court rules against S Korean gaming company and its AI-hatched takeover plan
WILMINGTON, Delaware, March 16 (Reuters) - A Delaware judge ordered on Monday that South Korean game developer Krafton Inc (259960.KS), opens new tab reinstate the head of one of its video game studios, ruling that he had been improperly removed as part of a takeover plan hatched by
[3]
A gaming CEO asked ChatGPT how to avoid paying a $250 million bonus. It didn't work | Fortune
When Changhan Kim, CEO of the South Korean gaming company Krafton, decided he needed a way out of a costly acquisition deal, he didn't call his lawyers -- he opened ChatGPT. The result is one of the most striking cautionary tales about AI-assisted decision-making in corporate America, and it ended
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Subnautica 2's Publisher Used ChatGPT For Legal Advice In Messy Court Battle
A judge has explained how the CEO of Krafton relied on an AI chatbot for legal advice and planning Court documents show that the CEO of Krafton relied on ChatGPT to formulate a plan to deny the developers behind the upcoming underwater survival game Subnautica 2 and take control of the studio and
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Subnautica 2 owner constantly relied on ChatGPT for legal strategy, judge says in scathing order: "Krafton followed most of ChatGPT's recommendations"
Last year, the founders of Subnautica 2 developer Unknown Worlds, alongside CEO Ted Gill, were pushed out of the studio by parent company Krafton. The trio sued Krafton, alleging they had been let go so they wouldn't be able to claim $250 million dollars worth of bonuses for delivering the game.
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PUBG: Battlegrounds maker Krafton CEO used ChatGPT to plan takeover, avoid $250 million payout court orders reversal
In a striking case highlighting the risks of AI-assisted decision-making, a Delaware court has found that Changhan Kim, CEO of KRAFTON, the company behind PUBG: Battlegrounds, used ChatGPT to plan the removal of leadership at Unknown Worlds Entertainment, according to a report by Fortune. A judge
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A Delaware judge ordered South Korean gaming company Krafton to reinstate Unknown Worlds Entertainment leadership after CEO Changhan Kim relied on ChatGPT to engineer their removal and avoid a $250 million earnout payment. The court ruling highlights critical concerns about AI in corporate decision-making and the need for human judgment in good faith business dealings.
Krafton Ordered to Reverse ChatGPT-Guided Takeover Strategy
A Delaware court has delivered a striking rebuke to Krafton, the South Korean gaming company behind PUBG: Battlegrounds, after its CEO turned to ChatGPT for advice on how to avoid paying a $250 million bonus payout
1
. Vice Chancellor Lori Will of the Court of Chancery ruled that Krafton improperly ousted the leadership of Unknown Worlds Entertainment, the Subnautica developer it acquired in 2021, and must now reverse course entirely2
. The court ruling represents one of the most cautionary examples yet of AI in corporate decision-making gone wrong.
Source: Fortune
The Acquisition Deal That Triggered an AI-Hatched Plan
Krafton purchased Unknown Worlds Entertainment for $500 million upfront in 2021, with an earnout dispute at the heart of this legal battle
2
. The acquisition deal included a promise to pay an additional $250 million bonus payout if the studio met certain performance targets. The contract guaranteed that Unknown Worlds would remain independent, with co-founders Charlie Cleveland and Max McGuire, alongside CEO Ted Gill, retaining operational control and only being removed for cause1
.Trouble began when internal projections showed Subnautica 2 would easily trigger the earnout payment. Krafton CEO Changhan Kim feared he was caught in a "pushover" deal and turned to artificial intelligence rather than his legal team for guidance
3
.
Source: Tom's Hardware
ChatGPT Provides Step-by-Step Corporate Takeover Blueprint
When Maria Park, Krafton's head of corporate development, warned Kim that dismissal without cause wouldn't eliminate the earnout obligation and could expose the company to "lawsuit and reputation risk," Kim consulted ChatGPT
4
. The AI chatbot initially responded that the earnout would be "difficult to cancel," but Kim pushed further3
.ChatGPT then provided detailed recommendations that formed the basis of "Project X"—an internal task force mandated to either renegotiate the earnout or execute a corporate takeover of the studio
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. The legal strategy included forming a task force, securing publishing rights over Subnautica 2 on Steam and consoles, implementing a "pressure and leverage package," and preparing "systematic material of legal defense"1
.Fan Trust Messaging and the Execution of Project X
The chatbot advised Krafton to frame the conflict around "fan trust" and game quality rather than financial disputes
4
. Kim even asked ChatGPT to draft a public-facing message to win over Subnautica fans, which backfired spectacularly and alarmed the gaming community3
. The message falsely claimed that Cleveland and Max McGuire were "considering" returning to helm Subnautica 2, shocking Gill and the Unknown Worlds team who "had nothing to do with" the overnight posting5
."Over the next month, Krafton followed most of ChatGPT's recommendations," Vice Chancellor Will wrote in her opinion
2
. Unable to get the leadership to renegotiate, Krafton removed Cleveland, McGuire, and Gill, alleging they deceived the company about diminishing time spent at the studio—a claim the Delaware court rejected2
.
Source: GamesRadar
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Human Judgment Required in Good Faith Business Decisions
The court ruling established critical precedent about the limits of AI in corporate decision-making. Will noted that in the United States, company directors and officers must exercise independent human judgment rather than outsource good faith decisions and processes to artificial intelligence
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. However, the primary basis for the ruling was contractual breach—Krafton removed the two founders and CEO without proper cause1
.Reinstatement Ordered and Earnout Period Extended
Ted Gill has been ordered back as CEO of Unknown Worlds Entertainment with authority to reinstate co-founders Charlie Cleveland and Max McGuire
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. The earnout period has been extended through September 15, 2026, to account for the disruption caused by Krafton's actions4
. Krafton cannot interfere with Gill's plans for Subnautica 2's early access launch4
. The South Korean gaming company disagrees with the ruling and is reviewing its options1
. As of Tuesday morning, Krafton's contact page was "temporarily offline"3
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